Pre-foreclosure

[Suzanna Lam]

Hello all,

I thought I'm gonna jump in and do my first pre-foreclosure just to test the water. I have access to a database that has all the pre-foreclosure. I read all the information contained in one pre-foreclosed information and became very confused. Could anyone help me understand:

1. Even though the NOD went out to the homeowner in May 2009. The default date indicated 6/2006 was the date of default. He bought the house in 5/2005 as indicated by the transfer date. How is this possible? I thought if you're behind in your mortgage by 6 months you're gonna get a NOD by the 7th month or something like that. In this case the homeowner, it appears, stopped making payment since 2006 and he's getting a NOD in 2009?

2. The same homeowner bought his house for $587K but is default for $544K. Zillow's estimated value is $342K. These numbers seem to indicate that this property is not a prime candidate for a pre-foreclosed deal due to zero equity in the house. Is my analysis correct? My question is how would know if a property is a good candidate for pre-foreclosure deal? Should the default amount at least 50% of the FMV as estimated by Zillows or comps?

Many thanks.

[John Fedro]

Suzanna, I have heard stories such as this for a while. There are ways to delay a lis pendens. The stories I have heard involved filing and refiling a bankruptcy, however with the new bankruptcy laws this is harder. Back in 04 I passed on investing in a home where the homeowner had not made a payment in 19 months, and recieved not one late fee or notice from the bank. (She simply slipped throught the system.) So yes it does happen... esspecially in todays market. Finance and service companies are months behind with all the foreclosures recently.

It does not sould like this is a deal. If you can find at home with an LTV of 40-60% a real "FMV", including closing, holding, and repairs cost, then tie it up with a contract!! But most of these homes will be gobbled up by other investors. And typically if a homeowner is anywhere close to 50% loan to value they would probably chose to refi before deal with an investor.

If you have a funnel set up to work short sales, put it in your pipe line. but I belive most people here would say "Next!"

And listen to Jon, dont trust zillow.

-John F